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ACQUISITIONS | 3 Months Ended
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Mar. 31, 2014
ACQUISITIONS | NOTE B —ACQUISITIONS Kitchen Craft On January 15, 2014, the Company acquired 100% of the share capital of Thomas Plant (Birmingham) Limited (“Kitchen Craft”) for cash in the amount of £37.4 million ($61.5 million) and 581,432 shares of common stock of the Company with an intrinsic value of £5.5 million ($9.0 million). The purchase price also includes contingent cash consideration of up to £5.5 million ($9.0 million) which will be payable in future years if Kitchen Craft achieves certain financial targets. Kitchen Craft is a leading supplier of kitchenware products and accessories in the United Kingdom. The assets, liabilities and operating results of Kitchen Craft are reflected in the Company’s condensed consolidated financial statements in accordance with ASC Topic No. 805, Business Combinations, commencing from the acquisition date. The purchase price has been determined to be as follows (in thousands):
Cash |  | $ | 61,302 |
Share consideration issued(1) |  |  | 8,382 |
Value of contingent consideration(2) |  |  | 2,488 |
Estimated working capital adjustment(3) |  |  | 663 |
Total purchase price |  | $ | 72,835 |
(1) | Share consideration issued is valued at the closing market price discounted to account for lack of marketability related to the lock up period as described in the share purchase agreement.
(2) | The value of contingent consideration represents the present value of the estimated payments related to the attainment of certain financial targets for the years 2014 through 2016. The maximum undiscounted deferred and contingent consideration to be paid on the agreement is £5.5 million ($9.0 million).
(3) | Estimated working capital adjustment represents the estimated future payment to be made as defined in the share purchase agreement.
The purchase price was allocated based on the Company’s preliminary estimate of the fair value of the assets acquired and liabilities assumed, as follows (in thousands):
|  | Purchase Price Allocation |
Accounts Receivable (1) |  | $ | 14,258 |
Inventory |  |  | 17,912 |
Other assets |  |  | 3,650 |
Other liabilities |  |  | (9,197 | )
Deferred income tax |  |  | (8,988 | )
Goodwill and other intangibles |  |  | 55,200 |
Total allocated value |  | $ | 72,835 |
(1) | The fair value of accounts receivable approximated the gross contractual amounts receivable.
Goodwill results from such factors as an assembled workforce. The total amount of goodwill is not expected to be deductible for tax purposes. All of the goodwill and other intangible assets are included in the Wholesale Segment. Customer relationships and trade names are amortized on a straight-line basis over their estimated useful lives (see Note D). Unaudited Pro forma Results The three months ended March 31, 2014 includes the operations of Kitchen Craft for the period from January 15, 2014 to March 31, 2014. The condensed consolidated statement of operations for the three months ended March 31, 2014, include $16.9 million of net sales and $0.4 million of net income contributed by Kitchen Craft. The following table presents the Company’s pro forma consolidated net sales and income (loss) before income taxes and equity in earnings for the three months ended March 31, 2014 and March 31, 2013. The unaudited pro forma results include the historical statement of operations information of the Company and of Kitchen Craft, giving effect to the Kitchen Craft acquisition and related financing as if they had occurred at the beginning of the period presented. As described below, the Company consummated certain other acquisitions during the three months ended March 31, 2014; however the Company has not included the results prior to their acquisition in these pro forma results as the impact would not have been material.
|  | Unaudited pro forma results |
|  | Three Months Ended |
|  | March 31, 2014 |  |  | March 31, 2013 |
|  | (In thousands, except per share data) |
Net Sales |  | $ | 118,411 |  |  | $ | 113,629 |
Loss before income taxes and equity in earnings |  |  | (2,510 | ) |  |  | (585 | )
Net loss |  |  | (2,077 | ) |  |  | (21 | )
Basic and diluted loss per common share |  | $ | (0.16 | ) |  | $ | (0.00 | )
The pro forma results, prepared in accordance with U.S. GAAP, include the following pro forma adjustments related to the Kitchen Craft acquisition:
| (i) | as a result of a $0.9 million increase in the fair value of acquired inventory at the acquisition date, the Company recorded a $0.5 million charge in cost of sales in the three months ended March 31, 2014 condensed consolidated financial statements. The pro forma adjustments reflect the elimination of this charge;
| (ii) | an increase in amortization expense related to the fair value of the identifiable intangible assets of $0.9 million in the three months ended March 31, 2013;
| (iii) | the elimination of acquisition costs recorded in the three months ended March 31, 2014 of $0.9 million;
| (iv) | an increase in interest expense and amortization of debt issuance costs of $0.5 million, resulting from the refinancing of the Company’s debt to finance the acquisition in the three months ended March 31, 2013;
| (v) | an adjustment to conform compensation expense to the Company’s current compensation policies.
The unaudited pro forma results do not include any revenue or cost reductions that may be achieved through the business combination, or the impact of non-recurring items directly related to the business combination. The unaudited pro forma results are not necessarily indicative of the operating results that would have occurred if the Kitchen Craft acquisition had been completed as of the date for which the pro forma financial information is presented. In addition, the unaudited pro forma results do not purport to project the future condensed consolidated operating results of the combined company. Other acquisitions In February 2014, the Company acquired certain assets of Built NY, Inc. (“Built NY”), including inventory, trademarks and other intellectual property. Also in February 2014 the Company acquired certain assets of Empire Silver Company, Inc. (“Empire Silver”), including trademarks and other intellectual property. In March 2014, the Company acquired the business and certain assets of La Cafetière Inc., La Cafetière UK (Limited) and Cafetière B.V. (collectively “La Cafetière”), including trademarks and other intellectual property, inventory and certain receivables. In aggregate, the Company paid approximately $5.3 million of primarily cash consideration for these acquisitions. The assets, liabilities and operating results of the acquisitions are reflected in the Company’s condensed consolidated financial statements in accordance with ASC Topic No. 805, Business Combinations, commencing from the acquisition dates.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1383-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6996-128479 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7000-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1392-128463 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1486-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6927-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1497-128463 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1490-128463 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7008-128479 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4845-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1500-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1524-128463 + Details
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